By Laura Pinilla, Associate, BaseFirma Colombia
As reported previously in MNE Tax, the Colombian tax office will soon require taxpayers subject to the transfer pricing regime to register commodities agreements. Taxpayers that do not register their agreements will face the possibility that the tax authority will set the price of the transaction.
In August, the Colombia tax office released Form 2573, designed to be used by taxpayers to register agreements.
Many questions arose among taxpayers and advisors regarding the new form and the Resolution 000067 of June 19, which regulated the registration of commodities agreements.
On September 28, the Directorate of Legal Management of the Colombian tax office published an official letter under number 1188, which clarified some of the most common questions
The Colombia tax office clarifications are particularly relevant now that the three-month period of voluntary registration has expired. As of November 4, taxpayers have one month to register commodities agreements, as specified in paragraph of article 1.2.2.2.4.1 of Decree 1625 of 2016.
Transfer pricing methods other than CUPs, no local file
The official letter clarifies that when a taxpayer does not use the comparable uncontrolled price (CUP) method in a commodity transaction’s transfer pricing analysis, the taxpayer has no obligation to register the agreement.
However, the Colombia tax office does note that the use of transfer pricing methods other than the CUP method in this kind of transaction is rare, as stipulated in article 260-3 of Colombia’s tax statute and Article 1.2.2.2.4.1 of Decree 1625 of 2016.
The Colombia tax office also stipulates that registration is not required if a taxpayer undertakes a commodities transaction with related parties but does not present a transfer pricing local file because it does not meet the 45,000 UVT per transaction threshold (about COP 1,542,150,000 or USD 470,598 for the fiscal year 2019.
Penalties, evidence
Another frequent question concerned the penalties for non-compliance with the rules on registration of commodities agreements, specifically, whether the sanctions stipulated in Article 651 of Colombia’s tax statute are applicable. The tax office clarified that the consequences for not meeting the deadline to register are only those specified in Article 260-3 of Colombia’s tax statute and Article 1.2.2.2.4.1 of Decree 1625 of 2016.
Finally, the official letter clarifies the meaning and scope of the expression “does not constitute reliable evidence,” which refers to credible or reliable evidence of the price indicated in the registry agreement.
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